Ohio Judge Fed Up With Malibu Media: Appears To Give Copyright Troll One Last Chance

from the pay-attention-now dept

With all the talk about Prenda and its copyright trolling practices, it's long been clear that the real king of copyright trolling in the US is Malibu Media -- better known as xArt -- and its legal team led by Keith Lipscomb (and we'll leave aside the fact that behind the scenes, it appears to be using the same German "international men of mystery" that other copyright trolls, like Voltage Pictures have been using). Either way, Lipscomb's shakedown campaign accounts for an astounding percentage of copyright lawsuits filed in the US these days. And, given some of the stories that have come out in these lawsuits, it's kind of astounding that the company has not received the "Prenda treatment" from any federal judges.

That may be about to change. Federal district court judge Timothy Black appears to have had enough of Malibu Media and its copyright trolling practices. In two separate cases this week, Judge Black issued "orders to show cause" (more or less judicial language for "I think you've done something really bad and here's your last chance to show me otherwise) that go beyond the usual level of "Hey, it appears you've been acting naughty" to a full blown recitation of all of Malibu Media's questionable practices.

Both orders (first one and here's the second) ostensibly focus on a common problem with Malibu Media's lawsuits: the failure to actually serve the defendants (when your main focus is just on getting identifying info to shake down people with threats that get them to settle, actually following official procedure required for an actual lawsuit falls by the wayside). And Malibu Media/Lipscomb/flunkies are notorious at screwing this up. In this case, Judge Black had already issued multiple orders to show cause over the issue. You can read about all the missed deadlines in the full filing, but Judge Black sees the problems here.

The much delayed filing of the summons return simultaneously forced the Court to unnecessarily expend judicial resources in the issuance of an Order to Show Cause and hindered the ability of the Court to manage its docket. With respect to the filing of an answer or other matters dependent on the date of service of process, the Court’s ability to actively manage its docket is entirely dependent on counsel filing a summons return within a reasonable amount of time.

But that's just the preamble. From there, Judge Black makes it clear he's well read up on all of Malibu Media's infamous shenanigans in gaming the judicial system for profit.

The Court does not view Malibu Media’s conduct in this action in isolation. Rather, the Court views it as part of an unmistakable pattern that has emerged in other actions before this Court and in context of observations made by multiple other federal judges in cases involving Malibu Media.

This Court has observed the conduct of Malibu Media and its counsel of record in over 60 cases filed in this District in the past twelve months. This is not the first case in which Malibu Media has filed a summons return well after the date of service. Counsel appears to have made a misrepresentation in seeking an extension of time to complete service in two cases. The Court also issued an order to show cause after counsel publicly filed a defendant’s name in direct violation of two orders unambiguously ordering counsel to file that information under seal.

We wrote about that public filing a few months ago. But that's not all that the judge has been watching. He's also well aware of the notorious "Exhibit C," where Malibu Media would file an "exhibit" of other movies that it believed the defendant may also have downloaded illegally -- even though it was not the copyright holder on those films. The titles were often very embarrassing, suggesting that the entire purpose of Exhibit C was to embarrass someone into settling so the list would not be associated with their name in court documents.

Judge Black also calls out the "swarm joinder" issue that was popular in early lawsuits -- whereby copyright trolls like Malibu (and others) tried to lump hundreds or thousands of individuals together in a single lawsuit, arguing it was proper to "join" them all since they participated in the same infringement. As Black notes, that misuse of the court system really only set the stage for a bunch of other questionable practices. It seems clear that Judge Black is well aware of the game being played, and even refers to it as copyright trolling:

Malibu Media asserts that it is necessary to invoke the Court’s subpoena power to “propound discovery in advance of a Rule 26(f) conference.” .... However, not a single one of these 60 cases has ever progressed to a Rule 26(f) conference. In fact, most cases are voluntarily dismissed by Malibu Media pursuant to Rule 41(a)(1)(A)(i) without obtaining a summons, but presumably after Malibu Media has used the third-party subpoena to obtain a settlement. The name of the IP subscriber is never provided to the Court in these voluntarily dismissed cases. This makes it impossible for this Court or any other court to determine, for example, if a later action should be dismissed with prejudice under Rule 41(a)(1)(B). In the few cases in which a defendant has appeared with counsel, counsel have raised numerous allegations of impropriety and abusive litigation tactics. The Court is not blind to the reality that these allegations likely substantially underrepresent the amount of misconduct that goes unreported by defendants who simply pay Malibu Media’s settlement demand rather than face the prospect of expensive and extensive litigation regarding their purported interest in pornography.

The Court is aware that Malibu Media, through separate local counsel, has filed thousands of similar cases in federal courts across the country. A copyright troll has been defined as “an owner of a valid copyright who brings an infringement action not to be made whole, but rather as a primary or supplemental revenue stream.” .... Under this definition, Malibu Media certainly qualifies. However, Malibu Media generally responds to this allegation by pointing to comments of the trial judge in the so-called bellwether trial as unassailable proof that its intentions and tactics differ from other entities that bring copyright infringement actions related to pornographic movies.

Oh right. The Bellwether trial. That case had all sorts of problems, including a lying defendant who tried to destroy evidence. Unfortunately, it did not do what it was initially intended to do: actually test some of Malibu Media's really questionable legal arguments. Judge Black quickly notes that the "bellwether" trial doesn't matter. Malibu Media is up to some really questionable judicial gaming. He walks through all of the abuses, from misjoinder to Exhibit C -- and even notes that despite being benchslapped over Exhibit C, Malibu Media just "evolved this practice":

Notwithstanding Malibu Media’s contention that it “instructed counsel nationwide to never file Exhibit C with a complaint again,” ... this Court has borne witness to the fact that Malibu Media has simply evolved this practice rather than eradicate it. In an Order issued in a separate case on October 6, 2014, this Court sua sponte noted a continued vestige of Exhibit C in several paragraphs of Malibu Media’s complaint.... Instead of attaching Exhibit C, Malibu Media adapted its practice and now made an explicit reference to a document with “additional evidence” that the defendant had distributed a large number of third-party files through BitTorrent.... Malibu Media disingenuously offered to produce this document to the Court with the seemingly off-handed remark that “many of the titles to the third party works may also be relevant to proving Defendant is the infringer because they correlate to the Defendant’s hobbies, profession, or other interests.” ... Citing the two Wisconsin district court cases that imposed sanctions for attaching Exhibit C, the Court struck the offending paragraphs from the complaint and ordered Malibu Media to file a conforming amended complaint forthwith.... Two months later, Malibu Media voluntarily dismissed the action without filing an amended complaint.

In discussing what to do about this, Black notes that, ordinarily, it's wrong to just dismiss a case to discipline "an errant attorney" since that would be unfair to the parties the lawyer represents. However, he notes that in this case, it's different. The sheer number of cases and the fact that Malibu/Lipscomb's games continue suggest that this is not just a bad lawyer not fairly representing the interests of a client. Oh, and it's clear Black knows that this is all being run through Lipscomb, rather than the random lawyers who actually turn up for local cases:

Here, and in the dozens of other actions before the Court, there is ample evidence that Malibu Media or its “outside general counsel,” rather than its local counsel of record selects the litigation strategy and tactics.
12 Accordingly, the general principle that “directly sanctioning the delinquent lawyer rather than an innocent client” may not apply here....

Still, Judge Black is incredibly patient. Despite the earlier orders to show cause, he once again gives Malibu a chance to explain itself. Though in the second of the two orders, Judge Black also lays out the possibility of "Rule 11 sanctions" against the lawyers for flat out lying to the court and failing to correct the record on it -- though again (perhaps surprisingly) suggests that the conduct to date is not enough to get there.

Here, the record indicates that on February 10, 2015, Malibu Media’s counsel represented that service had not yet occurred. (Doc. 10 at 2). However, it is clear that Defendant was served on January 26, 2015. (Doc. 12). Counsel made no attempt to correct this statement until after the Court issued an Order to Show Cause regarding the apparent failure to complete service of process.

It may be frustrating to those who are watching these cases that even this is not enough to bring down Rule 11 sanctions, but Judge Black has made it clear that he's watching -- and you can bet that other judges across the country may start to take notice as well. And assuming Malibu Media can't resist continuing to push things even further, the record of misconduct will be that much longer and more detailed.

Reader Comments

And then...?

And assuming Malibu Media can't resist continuing to push things even further, the record of misconduct will be that much longer and more detailed.

And then what? Assume it does reach that point, what real punishments are they looking at? Because if Prenda is any indication, parasites like this seems to be able to completely ignore any financial fines without repercussions, and other than that I have yet to see anything more significant than a slap on the wrist. The only reason anyone from Prenda even might face some jail-time is their continual believe that if they dig fast enough they can get out of the hole they're in, and given the 'punishments' they've faced so far, it's not hard to see why they'd think so.

That is the truly infuriating aspect to the whole 'legal extortion' business, that even when they get caught doing something that would land anyone else in jail on the spot, they get endless chances to 'explain' themselves, all the while they rake in the cash and ruin lives.

Re: And then...?

What real punishments are they looking at? They're not, because the plan is engineered in such a way to absolve the chief instigators from as much responsibility as possible - at least until it's time to rake the money in. That's why the only punishments that have happened are against monumentally stupid local lawyers like Schulz, but the puppetmaster Lipscomb escaped largely unscathed. Same thing when Steele made his "I'm not a lawyer" appearance in the Sunlust case.

One takeaway from all this is affirmation to not take claims of copyright infringement by large organizations seriously. Malibu Media's actions have further cemented my decision to take any such claim with a massive shaker of salt. It's hard to take someone seriously when they purchase a mansion that costs $16 million while screaming financial difficulties and devastation. Same thing when said individual claims that they're not trying to victimize anyone, but relentlessly pursue the destitute and disabled. And with a bit more luck, seeing how muleheaded Brigham and Colette are, more judges will see how much of the above bullshit they've been feeding.

Even if they don't get ruined by the judicial system, Malibu Media and Prenda ruined any possible goodwill on behalf of anyone else in similar shoes who wishes to pursue the same claims in court.

Re: Re: And then...?

Great, so a couple more years down the road, they might actually face some real punishment for their actions. I'm sure that will be of great comfort to all the people they've extorted and/or threatened in the past, and all those that they will do so to until the courts and government bothers to do something about them.

The possibility that parasites like this might, at some point down the road, face some actual punishment for their actions is a nice thought, but given it does absolutely nothing to protect or help all the people who get shaken down and threatened until it reaches that point, it's a small comfort at best.

They have a paid a tiny fraction of their gains as court costs, and have a larger amount (but still well under 10%) tied up in bonds. The sole hope that there will be some specific penalty is that the appeals court may grant their plea for a criminal sanctions. Which would negate even the penalty that required posting the bond, while taking years to resolve.

Re:

Emphasis on thus far, if you please.

Prenda, at least, has been referred to the IRS, and the federal district attorney in at least one jurisdiction, and the principles have been referred to every state bar where they're admitted to practice. Here is a recap of what has already been done to the company and the, uh, people running it. I have no doubt there will be more. As far as Prenda's principles asking for a criminal sanctions hearing, well, I've not heard a less intelligent decision in a very, very long time.

Somehow, I firmly suspect this business with Malibu Media has hit a point of no return, that before too long some judge somewhere will get so fed up with them as to slap them down just as Judge Wright did with Prenda.

Somehow, "give it time" doesn't seem just

Re: Somehow, "give it time" doesn't seem just

When some people get shot and killed for selling "loosies", and others get shot and killed for running away, and some people get imprisoned for elbowing a cop that cops a feel, it really seems like extra kid-glove treatment for any lawyers that manage to fuck up on a scale like Prenda or Mailbu Media. "Give it time" - feh, give it time for public outrage to die down so we can then have the prothonotary give them an official warning. Give it time so the Judges, who used to be lawyers, can figure out how to "punish" the lawyers, without actually punishing them. It kind of sucks. It looks like special treatment for special people to me.

Re: Congressional action?

They expanded copyright because Disney freaked out that a character might enter the public domain and somehow manage to destroy their entire business. You think they care that the system has been ripe for the abuse we see here?

Guys, this isn't the right place for this, but it's even hard for me to trust lawyers when they just say "give me $1000 and I can get a settlement for you."

I got a letter from my ISP the other day and Malibu is coming after me I guess. I'd love to ignore it and hope that this all crumbles down but I am afraid they will actually take me to court. I have NOTHING to give them, I'm in debt up to my ears already. WHAT DO?